PROJECT SUMMARY Cognitive deficits remain a major untreated problem in schizophrenia. The proposed research in this Competitive Revision application aims to examine some of the neurobiological processes by which cognitive training can rectify the pervasive cognitive deficits that characterize schizophrenia during the early course of illness. Cognitive training (CT) programs hold considerable promise for patients with schizophrenia, and recent research with animals and healthy humans demonstrates that combining CT with aerobic exercise (CT+E) can promote neuroplasticity and markedly enhance the effects of CT on cognition. However, the neurobiological mechanisms by which CT and CT+E bring about improvements in cognition among individuals diagnosed with schizophrenia remain poorly understood. We exploit recent advances in understanding auditory inhibitory processing dysfunction in schizophrenia to evaluate how CT might generate improvements in clinical ratings of attention and in performance measures of attention, working memory, and speed of processing. Specifically, we address the possibility that enhancement of early perceptual processing during CT serves to improve clinical and cognitive functioning in schizophrenia by fostering normalization of brain activation and connectivity implicated in auditory inhibitory processing. Other goals of the study include evaluating whether auditory inhibitory processing at baseline assessment predicts improvements in attentional functioning after CT and determining whether CT+E yields stronger effects than CT alone when impairments in auditory inhibitory processing are relatively severe at baseline. Neural mechanisms will be examined by obtaining electrophysiological (ERP and EEG) and diffusion tensor imaging (DTI) measures before and after first- episode schizophrenia patients receive either CT or CT+E through random assignment as part of the clinical trial funded by the parent grant (1 R01 MH110544-01). Clarification of the dynamic interactions between brain regions and their association with such complex behaviors as attention and working memory is an essential step towards developing more effective interventions to facilitate patients' functional outcomes.